February 10, 2011

Reasonableness Of Fees: $128,655 Fee Award Found To Be No Abuse of Discretion

Second District, Division 2 Sustains Substantial Award.

In Chapman v. Sullivan Motor Cars, LLC, Case Nos. B222542/B224885 (2d Dist., Div. 2 Feb. 9, 2011) (unpublished), plaintiff had a demurrer sustained without leave to his first amended complaint, with the lower court also adopting a referee’s decision to award attorney’s fees against plaintiff to the tune of $128,655 (out of a requested $170,655). Plaintiff appealed, claiming the fees were so high that they were tantamount to a penalty.

The problem was that plaintiff could not surmount the deferential abuse of discretion standard applicable to gauging reasonableness. (Serrano v. Priest, 20 Cal.3d 25, 49 (1977) [one of our Leading Cases].)

The referee did use the lodestar methodology, and the award was not a penalty. Plaintiff understated what was at stake, because he had asked for $550,000 in an appraisal valuation of his interest in an LLC. Because the underlying substantive claims arose out of the operating agreement, prevailing defendants were entitled to fees. (Adam v. DeCharon, 31 Cal.App.4th 708, 712 (1995).)